CLSA has retained its Outperform rating on Bajaj Finance with a target price of ₹1,150, implying a 20% upside from the current market price of ₹956.50.
The brokerage noted that net interest income (NII) and pre-provision operating profit (PPoP) were in line with expectations, while profit after tax (PAT) beat estimates by 3%, primarily due to lower-than-expected credit costs. However, CLSA pointed out that the reduction in the Provision Coverage Ratio (PCR) contributed to this beat, and adjusted credit costs would have been in line without that factor.
Importantly, AUM growth of 25% YoY stood out as a strong performance metric, especially amid a broader slowdown in retail lending. CLSA remains optimistic about the company’s medium-term earnings trajectory, projecting a 25% CAGR in PAT over the next two years, following a relatively softer FY25.
The brokerage believes Bajaj Finance remains well-positioned, given its diversified loan book, proven execution, and resilience in navigating sectoral stress.
Disclaimer: The views expressed in this article are those of the brokerage firm (CLSA) and do not constitute investment advice. Investors are advised to consult a certified financial advisor before making any investment decisions.
